The last time Bitcoin's volatility was this low, it rallied by over $2k (25%)
The calm before the storm?
Bitcoin has been remarkably stable over the last several weeks and months and that likely means a big move is coming.
Historically, in any market, periods of low volatility are often followed by periods of high volatility and that is definitely true in the bitcoin markets.
The bollinger bands are currently compressing and have been for weeks now.
We have seen this type of pattern play out numerous times over the last couple years and each time we saw a move in the $2k range follow shortly after.
Check out how things stand currently:
(Source: https://www.tradingview.com/symbols/BTCUSD/)
As you can see, the bollinger bands are tightening and the bandwidth is now at .08 which has been a trigger point for a spike in volatility in the past.
Now, here are several other examples where we saw similar setups to what we are seeing now.
In each instance we saw the bandwidth get very close to .08 before a sharp move of roughly $2k soon followed...
Keep in mind that the moves went both up and down:
(Source: https://www.tradingview.com/symbols/BTCUSD/)
Given the fact that the moves that broke out to the downside happened during the bear market while the breakouts to the upside happened in the flat to bull market phases, there is a probably a better than 50/50 chance this current setup ultimately resolves to the upside.
The large number of expiring BTC options contracts may also explain why bitcoin has been range bound these last few weeks:
The max pain for the majority of these positions happens as long as BTC stays below $10k through the end of this week.
Given that market dynamic, we may see bitcoin continue to go sideways and remain within this low volatility range before it ultimately explodes to the upside next week.
Right after all these open option positions have expired.
That tends to be how the markets work.
Prices tend to do what the least amount of people are positioned for.
Either way, given the macro backdrop and the news of late, bitcoin is in a great position for a sizable rally in the very near future.
Stay informed my friends.
-Doc
Posted Using LeoFinance
PayPal also made headlines yesterday, announcing that it will introduce cryptocurrencies to its platform. Source: https://www.coindesk.com/paypal-venmo-to-roll-out-crypto-buying-and-selling
I heard... https://hive.blog/hive-167922/@jrcornel/big-news-paypal-and-venmo-to-offer-bitcoin-support-to-their-325-million-users#@wiseagent/qce7gw
:)
Nice analysis here.
I do personally believe there is going to be a huge move on Bitcoin soon. Chances are, it can go both up or down, no one knows. I'll be personally looking at the reaction around 7500-7600 levels to take some risk and place some spot market orders for HODLing, depending on the reaction, and as well close my small short hedge positions. If it moves up, well, I'll get stopped out, but I'll still be able to ride on my spot positions :D
Lets see what happens though. There is a potential bullish case which can form if BTC starts moving up from that 7.5-8k region, I believe. (I wrote a small analysis on that as well)
That $7.6k area is the same area I have been looking at for a while now too. The thing is, it just never comes. Based on past patterns it should have happened by now, doesn't meant that it won't, just means perhaps that it is less likely now than it once was. Remember, things either correct in terms of price or in terms of time and the longer BTC stays up at these current levels, the greater the likelihood that the eventual breakout is up.
Yes, I agree. I've also been looking some of the notable global stock market charts. Looks like all of them are in sync as well. Markets do tend to confuse people many times though
Yep, global QE and money printing has just about all assets priced in fiat moving higher. Bitcoin has actually been under-performing these last several weeks...
We already had 7k, 6k, 5,4k, and 3k, i'd say they came and went! We were sitting down there for enough time to pick up! I did!! Maybe mewn ahead!!
You may be right. Though, I am still waiting for a nice little dip first, which hopefully is starting now. :)
The reason we know it wont move down is that the FED is printing money and buying stocks. The thing to keep in mind with this is that crypto is correlated with the stock market.
Crypto has almost zero actual risk at this point in time because the stock market is being propped up super hard.
Yes, though there are still those that think the stock market may crash soon. It's up more than 40% from the lows and with the coronavirus starting to rear it's ugly head again we may see further disruptions to the economy.
Personally I think we break higher, but not ruling out the possibility of a dip either.
Its literally like betting against humanity. If the FED is printing huge amount of money then I seriously doubt we will actually see the stock market crash again. The only direction appears to be up unless the USD collapses in which case gold Silver and Crypto will sky rocket.
this is by definition a bubble, and bubbles always pop. I wouldn't be so confident. Stocks do crash hard and they are currently completely decoupled from reality.
A bubble backed by the FED during an election year. :)
One could argue they have been mostly decoupled since 2009... At that point it was no longer a free market. It was a "Big Brother FED will have your back" market and it has been that way ever since.
yeah that's true, I mean perhaps it's a new economic model that somehow will continue to work. But I have heard that in general all fiat currencies have failed when they get printed to infinity. I guess the only thing that has prevented a dollar collapse is that the US still has a strong economy and military. But with China knocking next door...
Yes, on a long enough timeline all fiat currencies have failed. The USD may have years left, decades left, or centuries left but it too will likely eventually fail.
Agreed. From that standpoint bitcoin could do well as a risk asset along with stocks and it could also do well as a save haven should the dollar collapse... I like it's chances over the next 2 years. :)
We will see what in 2 years is. I think it is clear to me, bitcoin has a nice Future.
More Interesting for me is like, which alts are really promising and should be looked at :)
I agree. If your time-frame is 18 months to 2 years, the returns should be pretty good!
Indeed Doc the lack of volatility usually precedes a price spike of note. I envision it going to the upside. Although this year the economy is not like the past, with all the QE, so markets are behaving in an entirely new way. Uncharted territory for Bitcoin.
Yep. We are likely to find out pretty soon.